TMI Blog2011 (7) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... as erred on facts and in law in making an addition of ₹ 2,25,000 on account of alleged unexplained capital. (6) The Assessing Officer has erred on facts and in law in making an addition of ₹ 3,20,000 being the alleged profit. (7) The Assessing Officer has erred on facts and in law in making an addition of ₹ 5,57,000 on account of alleged profit. (8) The Assessing Officer has erred on facts and in law in making an addition of ₹ 54,000 on account of alleged profit. (9) The Assessing Officer has erred on facts and in law in making an addition of ₹ 2,16,56,000/- in the hands of the appellant on account of alleged profit on the basis of seized page 10. (10) The Assessing Officer has erred on facts and in law in making an addition of ₹ 10,85,125 on account of alleged profit on the basis of seized page 8. (11) The Assessing Officer has erred on facts and in law in initiating penalty proceedings u/s.158FA(2). 3. The ground of Appeal No.51/Rjt/2003 are re-produced as below:- (1) The learned Dy. Commissioner of Income Tax, Circle-1, Rajkot has grievously erred in passing the assessment order for the aforesaid period on 31.3.2003 wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Assessing Officer has erroneously referred to various order sheet entries, adjournments granted both the sides for good reasons in support of unsustainable order determined to be passed. Thus, the assessment order is predetermined and prejudicial and therefore deserves to be annulled. (9) That even though the assessment order was not getting barred by limitation on 31.3.2003 in view of section 153(3) of the Act, the learned Assessing Officer has erred in passing the assessment order under reference hastily which was rightly disapproved and hence no consequential prejudicial order substantive or protective could have been passed against the appellant. (10) Apart from the voluminous evidence relied on by the appellant referred in its submission dated 29.1.2003, the learned Assessing Officer has grievously erred in not taking into account the submissions made by the appellant in its letter dated 28.3.2003 accompanied with Medical Certificate of Shri Dhanraj Jethani, Affidavit in compliance with requirement, etc. (11) Lastly, in view of the objections dated 31.3.2003 raised by the appellant to the Commissioner of Income-tax I, Rajkot duly endorsed to him, he ought to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 8 and 10 seized from the resident of Shri M. N. Patel. The above names are appearing in books of the assessee because they must be having some dealings with the company. Therese names appearing on the seized papers do not establish any nexus with the assessee and the seized papers. Shri M. N. Patel is having his independent construction business and the possibility of these persons having business relations with Shri M. N. Patel also cannot be ruled out. Therefore, this cannot be used as an evidence against the assessee company. The A.O. has not examined the persons mentioned above. He has also not given any opportunity to the assessee company to rebut his findings. We fail to understand why the A.O. has not examined these persons to find out their transactions with Shri M. N. Patel and the assessee company. The A.O. has also held that the assessee was having bank account with Oriental Bank of Commerce and the name of the bank is also appearing on No.8 and 10 of the seized paper in a smuch as there is an amount of ₹ 8000/- written against O.B.C. on that paper. This also cannot be considered as an evidence against the assessee company. The assessee company is having bank acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that adverse findings had been given by the Tribunal against him without giving him an adequate opportunity of being heard. The Hon ble Gujarat High Court accepted the contentions made by Shri M. N. Patel by its order dated 17.4.2001. The Hon ble High court quashed paras 21 to 28 of the order of the Tribunal dated 20.6.2000 and directed the Tribunal to decide the matter afresh. It further directed that both the appeals i.e. that of the assessee Shri M. N. Patel and that of Ambica Realities Pvt. Ltd. be heard together. Pursuant to the directions of the Hon ble High Court, the Income Tax Appellate Tribunal heard the appeal of the assessee Shri M. N. Patel and the company Ambica Realities Pvt. Ltd. together. The orders were passed on 10.10.2001 in appeal No.IT(SS)A No. 11/Rjt/98 and in appeal No. IT(SS)A No.7/Rjt/98 pertaining to the cases of Ambica Realities Pvt. Ltd and Shri Mansukhlal N. Patel respectively. In the said order the Tribunal restored back the issue to the Assessing Officer to decide the matter afresh. The observation of the Tribunal in para 27 is material as it gives directions to the A.O. and is reproduced as follows: We have considered the rival contentions and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e letter No. DCIT. Cir.1/142(1)/02-03 dated 31.12.2002. The contents of the said letter is reproduced below: 2. Please refer to the appellate order of the Hon ble Income Tax Appellate Tribunal, Rajkot Bench, Rajkot in your case having No.IT(SS) A No.7/RJT/98 dated 10.10.01. The Hon ble ITAT has set aside the block assessment to be decided afresh at the level of Assessing Officer. In this context, you are hereby informed that hearing in your case has been fixed on 27.12.2002 at 11.30 AM. 3. The issues under considerations are: (a) The additions of ₹ 6,92,820/- made in the block assessment on the basis of notings on page 8 of Annexure-A seized during the course of search. (b) The addition of ₹ 34,25,000/- made in the block assessment on the basis of the notings on page No.10 seized during the course of the search. 4. In this regard you are requested to file your detailed submissions in duplicate alongwith all documentary evidence you would like to place reliance with regard to your contention. In this regard you are also requested to explain as to why the above additions should not be made in your case. In case you want to present witnesses to substantiate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page No.8. B.P. 2,95,375 P.P. 1,25,000 R.S. 39,000 Bank 9,61,000 Amarkumar B.P.10/- 90,000 1.5 month 1.25% 18,750 O.B.C. 8,000 15,37,125 Less : D.P. 4,52,000 --------------- 10,85,125 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Cash 3,00,000 N.C. 50,000 -------------- 23,30,000 (+) 1,750 --------------- (In page No 10 the AO has taken amount new capital ₹ 9,15,000/- whereas as per other record it should be ₹ 9,16,000/-) 9. The A.O. noted that Shri Mansukh N. Patel, the assessee during the relevant period was having 6.25% share holding in Ambica Realities Pvt. Ltd. On 24.12.96 a search was conducted on the Group cases of the said company. Therefore, the premises of Shri M. N. Patel was also searched and Page No.8 10 was seized from his premises. In his statement on oath Shri M. N. Patel has explained the contents of the said documents in detail. The statement given in Gujarati by the assessee explaining the contents of page No.8 10 re reproduced in English by the AO in his order as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action pertaining to the above mentioned land was undertaken by Shri Dhanrajbhai Jethani in the capacity of the director of Ambica Realities Pvt. Ltd. Rs.22,77,750/- sub total D.P. - stands for Diliphbhai Pate. In one transaction Dhanrajbhai myself were partners and my share of profit in that transaction was ₹ 54,000/-which has been credited to my account. Rs.23,31,750/- sub total Less: Amarkumar - The amount of ₹ 90,000/- was given to me by Shri Amarkumar with respect to booking of flat in Indraprasth Apartment. Accordingly, the said amount has been adjusted from my account. Bhudarbhai He is my cousin brother. He had earlier taken ₹ 1,10,000/- from Dhanrajbhai. The said amount has been deducted from my account. Flat This pertains to the flat in Raghukul Apartment which is on 10th floor of the 1st block and it is under my possession. My cousin brother Bhudarbhai stays in that flat. On account of possession of this flat a sum of ₹ 12,85,000/- has been deducted from my account. The registration of the flat has not been done as on date. Office - This pertains to the office in Dhanjrajni building on the 3rd floor. This office is in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss examination to Shri Rajubhai Shukla, advocate and counsel for Ambica Realities Pvt. Ltd. cross examined Shri M. N. Patel and the questions asked and the replies given during the stage of cross examination are reproduced in English by the AO as follows: Q.1 On what date was a search by the Income Tax authorities conducted at your place. A. The search was conducted on 24.12.96. Q.2 During the course and after the completion of the search proceedings did DDIT(Inv.)I, Rajkot ask your explanation in respect of page No.8 10 found from your residence. If yes, what was your explanation given. A. With respect to page No.8 10, I told DDIT(Inv.)I, Rajkot that Shri Dhanrajbhai knows about the said papers. Q.3 Other papers alongwith page No.8 10 were found at your place. Were any questions asked to you with reference to papers other than page No.8 10. If yes, what did you reply. A. I have given adequate reply with reference to other papers. Q.4 I am showing you your statement dated 07.02.97 in which you have given your explanation w.r.t. page No. 1 to 74 of Annexure A/4. In all your answers you have stated that all the papers have been given to you by Dhanraj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Pvt. Ltd. and as stated earlier I own an office in Dhanrajni Building and Flat in Raghukul Building, the cost of which has been deducted from my account at the time of settlement. These details have been shown on both the pages. On the basis of the above, I can say with confidence that the accounts pertain to Ambica Realities Pvt. Ltd. Q.8 You have stated that your share belong in the company is 6.25%.S However, it is seen that you own 300 shares in the company and your son Jitesh owns 625 shares in the company and the total share holding of the company is 25000 shares. Therefore, it is seen that you share holding would be much less than 6.25% as you claim. A. I have given my written explanation in this regard in which my share holding is 6.25%. ( The assessee in his submissions dated 28.03.2003 has stated the following regarding his share holding) The share holding of my family in the company was 300 shares in my name. 625 shares in the name of my son Jiteshkumar M. Patel and 625 share in the name of my nephew Raviketan, thus aggregating to about 6.25% of the total shares of the company. Q.9 What post do you hold in RCC bank. A. I am a director in RCC bank. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t sum has been given by you. Have you obtained any receipt in that regard. A. As regards the flat and office I have to state that the above sum has been deducted from the account due to me on account of my share of profit in Ambica Realities Pvt. Ltd. and the sums given to the said company by my family members. As I am a director in Ambica Realities Pvt. Ltd. generally no receipts were obtained from each other on account of any give or take transactions. Trust is of utmost importance in the business. Q.17 You have stated that above sum has been accumulated from the profits of the projects of Ambica Realities Pvt. Ltd. You are a director in the said company then please state as to from what project the said profit has been received. A. Shri Dhanrajbhai was looking after the management and all affairs of Ambica Realities Other projects. I do not know anything about how much profit from what project was made. Q.18 You have stated in you letter dated 24.12.96 that MxP means Manharlal Patel and today you have stated that MxP means Mansukhlal Patel. Please give your clarification. A. 1997 and now 2003 year is in progress. Six years earlier I had stated MxP means Manh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany by cheque. The Xerox copy of bank statement of Ambica Realities Pvt. Ltd. are also attached herewith. (iv) List of land 73/75 purchased by Ambica Realities Pvt. Ltd. on the name of Director, share holders and relatives. (v) Flat purchased deed of Shri Amarkumar Jdeja in the name of his son. The copy of bank DD and copy of receipt given by Ambica Realities Pvt. Ltd. are attached. (vi) Xerox copy statement showing the accounts of M. N. Patel in which short signatures have been made by Mr. Dhanrajbhai Jethani as a proof of receiving the amount by Shri M. N. Patel from Mr. Dhanraj Jethani. 13. The evidences submitted by the assessee.Shri M. N. Patel has been discussed by the AO as follows: (i) The document in support of possession of office No.309 in Dhanrajni building submitted by Shri M .N. Patel is the copy of the bill issued by Rajkot Municipal Corporation towards Property Education tax for the amount totaling Rs,74,112/-. The said bill has bears the No. 154345 date 07.09.2002 has been issued in the name of Shri M .N. Patel. (ii) The evidence regarding occupation of the Raghukul flat is the Municipal taxes bill issued by Rajkot Municipal Corporation da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further the second entry on this page is regarding ₹ 1,20,000/- received by pay order dated 21.03.95. This can be co-related with the date of pay order of ₹ 1,20,000/- bearing No. 1018 dated 21.03.95 drawn on Cooperative Bank of Rajkot Ltd. received by Ambica Realities Pvt. Ltd. on account of the sale consideration of flat in Indraprasth Apartment sold to Shri Dharmendrasinh Amarkumar Jadeja. On page 10 it is observed that it is mentioned cash ₹ 3,00,000/-. All the corresponding entries totaling cash of ₹ 3 lacs is highlighted in Annexure A by the letter B. Cash has been received by Mansukhbhai from Shri Dhanrajbhai as follows: 01.06.95 Rs. 35,000/- 01.07.95 ₹ 15,000/- 02.08.95 ₹ 15,000/- 20.09.95 ₹ 35,000/- 21.09.95 Rs.2,00,000/- The total of above amount comes to ₹ 3,00,000/- which also tallies with the narration cash ₹ 3,00,000/- given on page 10 seized from the residence of Shri Mansukhbhai. (vi) The writings on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seized document page No.10 has arisen on account of one transaction the assessee and Dhanrajbhai Jethani had undertaken as partners. The assessee in his statement has confirmed that his share of profit was ₹ 54,000/-. The same is accordingly brought to tax. 11.6 As per page No.8 the total profit earned by Ambica Realities Pvt. Ltd. ₹ 10,85,125/- and the share of profit of the assessee is ₹ 67,820/-. Further as per page No.10 the share of profit being 6.25% of the total is being ₹ 13,53,500/-. In this regard the assessee has submitted that the said profits are profits of Ambica Realities Pvt. Ltd. and the company has not declared any dividend to the share holders. In the case of a private limited company the profit cannot be directly given to the share holders but it can be distributed in the form of dividend. In this regard it is pointed out in his statement the assessee has explained that page No.10 is the details of settlement of his transactions with Ambica Realities Pvt. Ltd. He has also confirmed that after the settlement of the total transaction the net amount due to him of ₹ 1750/- was paid to him by Shri Dhanraj Jethani. Therefore, the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on page 8 and addition of ₹ 34,25,000/- based on page 10 is, in view of the facts discussed above, is decided against the assessee and added to the total income. The said additions are individually discussed in para 11 (11.1 to 1.7) above. 15. The order of the A.O. has been approved by C.I.T.I., Rajkot vide his DO No. C.I.T.R.I/HQ/158BC/MNT/2002-03 dated 31.03.2003 subject to the directions of the Addl. C.I.T.RR.I, Rajkot, contained in his letter No.Addl./C.I.T./RR/Scr.Asstt/2003-03 dated 31.03.2003. The contents of the letter of Addl. C.I.T.RR.I, Rajkot of his letter dated 31.03.2003 having No.Addl./C.I.T./RR/Scr.Asstt/2003-03 is reproduced by the in his order as follows: This draft assessment order has been received by me today at 11.00 AM. Originally, though he had given the draft order on 27.03.2003 which was sent to the Commissioner of Income-Tax, Rajkot. The Commissioner of Income-Tax, Rajkot had returned back the said file and Assessing Officer was directed to carry out ITAT s direction in this case Assessing Officer got only one day to carry out his directions i.e. on 28.03.03. In one day he had tried to do what is possible. The main issue in this case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis. The above profits are accordingly taxed in the hands of the assessee, Shri M. N. Patel on substantive basis and protective additions were made in the hands of company, Ambica Realities Pvt. Ltd 17. Since this is a substantive and protective assessment order and this is the first year of Shri Mansukhlal N. Patel. The ld. A.R. after briefing the facts of the case, submitted that in de novo assessment, the assessment cannot be more than originally undisclosed income assessed. The ld. A.R. in support of his contention relied upon the order of ITAT in ITA No.1941 2200/Mum./2004 order dated 2901201997 and ITA No.5371 5803/Mum/2005 order dated 29-12- 1997. The ld. A.R. submitted that in original assessment, the assessee has filed a letter dated 24-12-1997 where the assessee has explained the each and every noting of the paper in details. The ld. A.R. submitted that the A.O. has failed to carry out directions numbers 4, 5 and given by the ITAT in first round of litigation. The ld. A.R. submitted that the A.O. is not carrying out the direction of the ITAT therfore, the order is bad in law. He relied upon the judgment of Madras High Court in case of 171 ITR 373. It is also subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature on behalf of the assessee-company by Mr. Dhanraj Jethani, the Director or anyone-else. There is no reference to any property or transaction in the ordinary course of business of the company. Even nature of transaction is not described on it. The ld. A.R. submitted that it is not stated on the loose papers that capital means capital of assessee-company. It could be anything, even person capital. The ld. A.R. submitted that that the loose papers does not carry any date. Therefore, it cannot even be inferred that the figures are covered by the block period. The ld. A.R. submitted that the so-called page is not shown to be part of seized papers and it is introduced after 7 years for the first time. Hence, it should be considered as an afterthought, not confronted to the company at all by the A.O. and no opportunity of rebutting the same, hence the said page cannot be used against the company and cannot be admitted as evidence forth-coming from Shri M.N. Patel. The ld. A.R. submitted that the assessee-company denies that these are hand writings or initials of Shri Dhanraj Jethani and nothing of the sort is investigated or proved by the A.O. To use of such loose papers against anyo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsel of Ambica Realities Pvt. Ltd. in rejoinder submitted that whatever stated by Mr. Patel were not confronted the assessee-company. 22. We have heard the learned representatives of the parties, record perused. The admitted facts of the case are that it is a second round of litigation. In first round of litigation, the matter has been sent by the ITAT to the A.O. after making some important observations and with certain directions which are reproduced in para-5 of his order. While sending back matter to the file of A.O. the ITAT in case of Ambica Realities Pvt. Ltd. order dated 10-10-2001 clearly given findings in para-20, page-10 of the order that it is the primary duty of the A.O. to go to the root of the matter and dig out the truth. The relevant finding of ITAT is reproduced from the order reads as under:- 20. We have duly considered the submission of all the three parties and the material on record. At the outset, it may be mentioned that it is the primary duty of the A.O. to go to the root of the matter, dig out the truth and come to a fair and reasonable conclusion. It is he who is primarily determining as to how much tax to be levied on the tax payer. He cannot coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,21,320/- -- 22(3) Let us see, how the AO has carried out/ framed the assessment order and noted down the facts of the case in his conclusion. The A.O. in his order up to page-16, para-10 reproduced the submissions and contentions of the parties what they are stating in respect of different entries of loose papers page-8 and 10. In Para 11 the AO noted item wise of the papers and stated that the assessee failed to explain adequate nature and source of the amounts therefore he made addition of ₹ 69,820/- and 34,25,000/-.The relevant Para 11 of the AO s order reproduced as under:- 11. Shri M. N. Patel in his statement before the undersigned has confirmed that he is a party to all the transactions shown on page 8 and 10 of Annexure A-4 seized from his premises in the capacity of beneficial share holder to the extend of 6.25% of Ambica Realities Pvt. Ltd. Further, he has also confirmed that his transactions with the companty Ambica Realities Pvt. Ltd. has been reflected on page Nos. 8 10. Further, he has also stated that he having control and possession of flat in the Raghukul Apartment and office in Dhanrajni Buildeing in view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to the share holders. In the case of a private limited company the profit cannot be directly given to the share holders but it can be distributed in the form of dividend. In this regard it is pointed out in his statement the assessee has explained that page No.10 is the details of settlement of his transactions with Ambica Realities Pvt. Ltd. He has also confirmed that after the settlement of the total transaction the net amount due to him of ₹ 1750/- was paid to him by Shri Dhanraj Jethani. Therefore, the details of receipts due to the assessee are shown on page 10. Page 10 gives the details of the settlement of unaccounted transactions and as in the form of copy of account of the assessee in which the credit and debit entries are duly reflected. The total of credit entries after transfer of ₹ 10,93,750/- to a new fund comes to ₹ 23,31,750/-. The total of similarly debit entries comes to ₹ 23,30,000/-. Finally, the balance amount of ₹ 1750/- has been paid to the assessee by Shri Dhanraj V. Jethani in cash and the account has been adequately settled. Therefore, the contention of the assessee that no dividend has been received from the company is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... returned back the said file and A.O. was directed to carry out ITAT s direction. The A.O. got only one day to carry out the direction i.e. on 28-03-2003 and in one day he had tried to do what is possible. It has also been contended in the letter that the A.O. has not taken statement of all persons Amarkumar, Bhudarbhai, N. C. Pandya, Batukbhai Patel, Prafulbhai Patel and others those persons whose names appear in the seized papers. However, under the circumstances, it is stated that the addition can be made on the basis of seized papers in the hands of both persons i.e. Mansukhbhai s hands substantially and in the hands of Ambica Realities Pvt. Ltd. Protectively. Since the case is getting time barred today i.e. 31-03- 2003, the A.O. simply followed the direction of C.I.T., Rajkot and Additional C.I.T. stating that the direction was being of statutory and binding nature. The order of the ITAT dated 10-10-2001 and the A.O. was to complete assessment by sending draft order dated 27-03- 2003 at the end of the period when it is going to be time barred i.e. 31-03-2003. Finally the AO made the assessment as per the direction as under :- 8. Subject to the above, the total undisclosed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the ITAT and also failed to put the complete facts on record after necessary investigation and examination. The A.O. overlooked all the clues and hints of M. N. Patel regarding some of the entries which require further examination and investigation. In the appellate jurisdiction, the appellate court has to consider whether there is a justification of the order of the A.O. against which the appeal is filed. Though, the allegation of the department that the assessee could not appear before the A.O. in spite of several opportunities given to them and availed their opportunities for hearing for a limited purpose only, this contention of the revenue cannot be accepted at this stage as per the above detailed discussions particularly when the A.O. did not exercise his powers under the Act including the powers given u/s. 131 and 136A of the Act and others. We therefore, not of the view to send back matter to the file of the A.O. for giving one more inning of the litigation particularly considering the present scenario of the litigation and old case related to the period 1986-87 to 25-12- 1996.Under the circumstances we proceed to decide the matter on the basis of material and facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Unexplained capital ₹ 2,25,000 Profit ₹ 3,20,000 Profit ₹ 5,57,500 Profit ₹ 54,000 Total Rs.20,72,500 Profit (Rs.10,85,825/- page 8 Rs.2,16,56,000/- page10) On protective basis. Total Rs.2,27,42,125 Unexplained capital ₹ 6,25,000 22(8) The contention of ld. A.R. of Mr Patel is that the A.O. without jurisdiction increased the amount of addition. The A.O. himself in show cause notice stated that the issues which are for consideration was only in respect of ₹ 6,92,820/- and ₹ 34,25,000/-. We find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital in spite of admitting before the A.O. that the amount was from his personal savings account and from the firm-Satiya Vijay Soda Factory and from account of his son Jitesh Patel. It is settled principle of Law of Evidence that if the best evidence is not produced, an adverse inference can be taken. Since the assessee has failed to furnish the necessary details, we therefore, the addition of ₹ 6,25,000/- made by A.O. on substantive basis is confirmed. 22(10) (ii) ₹ 67,820/- profit on the basis of page No.8 : Before the A.O. in the statement, the assessee stated that ₹ 67,820/- is 6.25% share of profit of ₹ 10,85,125/-. The A.O. in para-11.6 in respect of page No.8 noted that the total profit earned by Ambica Realities Pvt. Ltd. was ₹ 10,85,125/- and the share of profit of assessee was ₹ 67,820/-. Further, as per page No.10, the share of profit being 6.25% of the total is being ₹ 13,53,500/-. He further noted that the assessee has submitted that the said profits are profit of Ambica Realities Pvt. Ltd. The page No.10 as explained by the assessee is the details of settlement of his transaction with Ambica Realities Pvt. Ltd. The asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revenue to assess the income in the hand of the real owner. The revenue is lacking in discharging this onus regarding the balance profit. Therefore, we are of the view that this balance amount of profit cannot be assessed in the hands of Ambica Realities Pvt. Ltd., to that extent the protective addition from the hands of Ambica Realities Pvt. Ltd. is also deleted. 22(11) Second amount in dispute is ₹ 34,25,000/-, which is total of two amount, (a) ₹ 20,72,000/- on substantive basis and (b) ₹ 13,53,500/- on protective basis ( both amount on the basis of page No.10.) The amount of ₹ 20,72,000/-is the total amount of various additions of which is discussed as below :- i) ₹ 9,15,000/-( ₹ 9,16,000/-) capital as per page No.10 ii) ₹ 2,25,000/- Capital as per page No.10 iii) ₹ 3,20,000/- profit page No.10 iv) ₹ 5,57,500/- survey No.73/75 - page No.10- v) ₹ 54,000/- Page No.10 22(11) (i) ₹ 9,15,000/- capital as per page No.10 :- ( it appears that there is typographical mistake in figure, it should be ₹ 9,16,000/-) Mr. M. N. Patel in his statement in reply to question No.5 stated that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said profit. There is no other material on record. Keeping in view the discussion made in above Para, we find that there is no dispute that the amount of ₹ 3,20,000/- is profit. In absence of the complete detailed filed by the assessee, the addition of ₹ 3,20,000/- is confirmed in the hands of the assessee Shri M. N. Patel as the assessee has failed to explain the source of profit. Further, merely on the basis of assessee s contention, the amount of ₹ 3,20,000/- cannot be added in the hands of the company Ambica Realities Pvt. Ltd. Therefore, the protective addition to the extent of ₹ 3,20,000/- is deleted. 22(11) (iv ) ₹ 5,57,500/- survey No.73/75 : The assessee in his statement in reply to question No.4 stated that survey No.73/75 given on page No.10 pertaining to 50-60 parties sold the land in plotting. In reply to question No.2, it was stated that 73/75 is a survey no. is a plot located opposite Gondhya Hospital and amount ₹ 5.57,000/- is of the profit. The said transactions were conducted by Dhanrajbhai in the capacity of Director of Ambica Realities. Shri M. N. Patel in cross examine by N. C. Pandya, cousin of to the assessee vide reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of land transaction in survey No.73/75. The contention of ld. A.R. of Ambica Realities Pvt. Ltd. is that the A.O. did not treat this income in the hands of the company neither on protective basis nor on substantive basis. After considering the totality of the facts of the case, it is true that this amount has been added in the hands of M. N. Patel and such addition was not made in the hands of the company either as substantive or protective basis. Now question remain to be seen whether under the facts and circumstances, this amount be added in the hands of M. N Patel. We find that the A.O. made the addition without extracting complete facts though; there was sufficient material before the A.O. for his further examination and investigation. The ITAT has clearly directed that the related persons should be examined but we noticed that the A.O. has failed on this count. The AO did not examine any document or person come to notice from the statement of Mr. Patel and other documents and explanation furnished. Since, the revenue has failed to put on record the complete facts and sufficient material regarding the owner of the profit or income of this amount, therefore this amount cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2, 16, 56,000/- was taxed on substantive basis as the relevant page No.8 and 10 were found and seized from the premises of the assessee M. N. Patel. It is admitted facts that and as discussed in various Para of this order that in spite of availability of the sufficient material , documents and explanation for examination and investigation by A.O. to put on record the complete facts but he failed to do so. He has also failed to comply with the directions of the ITAT. Further, this 100% profit has been added by A.O. in the hands of the assessee M. N. Patel on the basis of direction which were without examination of the facts of the case. In absence of complete material facts and in absence of complete verification and examination, the 100% amount cannot be added in the hands of assessee M. N. Patel. As regards the share of assessee 6.25% ₹ 13,53,500/-, there is no dispute that this profit belongs to the assessee M. N. Patel and to that extent, addition is warranted, we accordingly, confirm the addition to the extent of the assessee s share in profit ₹ 13,53,500/- out of the total addition Rs. ₹ 2, 16, 56,000/. Now, the question is to examine regarding the ownersh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 sustained in the hands the assessee, MN Patel as his share in profit. Therefore, to that extent the amount are confirmed on substantive basis from protective basis and balance protective addition are deleted. The balance additions are also deleted on the ground that this was not the part of the direction of the ITAT. 22(15) summary of addition sustained and deleted. Thus, summarizing the position of additions confirmed and deleted by us which were made on the basis of seized papers (Pages 8 10), the following picture emerges: (A) In assessee M. N. Patel s hands. Loose Page 8-Confirmed para No 22(10)(i) ₹ 6,25,000 Loose Page 10 (Detailed asunder) ₹ 20,72,500 Deleted Para No22(11)(iV) ₹ 5,57,500 Deleted Para No 22(11)(ii) ₹ 2,25,000 Deleted Para No 22(11)(i) ₹ 9,16,000 Confirmed Para No 22(11)(iii) ₹ 3,20,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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